Tuesday, November 5, 2013

Color on Wuxi Suntech Restructuring

"Wuxi Suntech’s creditors are being given the option of trying to increase their recoveries a tad largely by going after claims against parent company Suntech Power’s main European vehicle, two sources familiar with the situation said, citing a recovery plan circulated by administrator.

More than 500 unsecured creditors of Wuxi Suntech -- New York-listed solar-panel maker Suntech Power’s core manufacturing subsidiary -- are to vote next Tuesday (12 November) on a restructuring plan under Chinese bankruptcy law, the two sources familiar said. Under the plan, all creditors will get the first CNY 100k (USD 16,400) of verified claims fully repaid and 31.55% of the claims above that amount in cash, according to the plan, they said. Creditors can either choose the 31.55% cash settlement, or 30.85% cash plus 0.94% in receivables."
A correspondent writes in,
"There is clearly something we are missing in the Guolian calculus. I think we probably don’t understand the Communist party incentive system sufficiently.

I think it is pretty clear that the Chinese banks have put the screws to Suntech Wuxi/Guolian. The fact that the holdco defaulted shouldn’t have necessarily pushed Wuxi STP in BK. I know they probably had cross default clauses, but if the banks wanted to waive that they could have. Instead, as soon as the default occurred they pushed Wuxi into BK. In the meantime, Wuxi has been funding Landsun, probably as a way to keep the job count up, and maybe as a way to burn a little less coal.

The NYSE listing obsession is a headscratcher. Maybe the communists hand out merit badges for that. Or maybe they are just hopelessly naïve about how BK works here, though it is hard to believe they ignore their lawyers that thoroughly, who must have explained things to them. They have a GC who has passed the California bar, it’s hard to believe he doesn’t understand the rudiments of how BK court works. Maybe the plan is a two step deal where they show up with $150MM after the company exits BK and they have a pre arranged side deal with the debt holders to accept the equity (which will not be disclosed), after they are in control post BK."


Anonymous said...

This will really never end.

Shunfeng vote is not until Feb.

They may not exit China BK until the spring.

They can appeal any delisting and any US BK attempts.

Anonymous said...

They are going to embarrass themselves in front of the SDNY BK judge the same way they did in front of the SDNY district judge.

You won't want to miss that hearing.

Into Chapter 7 they will go!

Anonymous said...

hard to argue against the view that this will go on forever...as it has already gone on a lot longer than anyone could have expected.

perhaps tomorrow's hearing will accelerate the timeline.

Anonymous said...

There is no hearing tomorrow. A hearing could be a month or more away.

On a positive note, the bonds just traded 19.25

John said...

The key question is how long can suntech put off bankruptcy. They are obviously going to drag this out as long as possible. I wouldnt count on the NYSE doing anything. I also dont think they will complete debt/equity exchange with bondholders.

Does anyone know how long the appeals process will take in the chapter 7 case?

Anonymous said...

Interestingly, if a trustee is appointed over a bankrupt company, the deposed management does not have standing to appeal!!

It's lights out.

Anonymous said...

STP will need to respond to the Chapter 7 petition with either a motion or an answer tomorrow.

If STP does not respond, then it will be bankrupt outright.

If STP does respond, then the response will give us some sense of the bankruptcy timeline.

You can find the Chapter 7 petition here: http://www.scribd.com/doc/176116672/show-temp.

Keep an eye on the news tomorrow.

Anonymous said...

FYI you can find the next steps of a provisional liquidation in Cayman Islands here: www.conyersdill.com/publications/view/cayman-islands-insolvency-law.